Wednesday, April 23, 2008

Russia Motor Vehicle Market is Booming!

After meeting with GM's President in Russia yesterday, our group of 14 UM-Flint MBA students visited Russia's largest Chevy dealer yesterday in Moscow, where they also sell Hummers, Saab, Opels and Cadillacs (including STS and CTS models made in Lansing, Michigan). The dealer sells about 1,000 vehicles per month, and was hoping to close 40 deals yesterday. Sales this year have doubled compared to last year.

For new car sales, prices are fixed by GM and not negotiable. Salespeople are paid a fixed salary, and do not receive commissions for each sale, but do have some incentives for excellent customer service ratings. About 40% of the vehicles are financed through banks, typically for 5 years at interest rates of about 10-14% right now (inflation is about 12% here).

Vehicles at the Chevy dealer range from the $10,000 Chevy Spark (pictured above) to the $100,000 Cadillac Escalade.

During our trip to Togliatti where we visited GM's joint venture with AutoVAZ, we learned that the average autoworker here makes about $800 per month, and the average age of the Russian autoworkers is about 24 years old (some of them look almost like high school students!).

"For new car sales, prices are fixed by GM and not negotiable."Interesting, in Guatemala where you hagle virtually everywhere, new cars are one of the few fixed prices. When i mentioned to a woman I was taking Spanish lessons from, she was shocked that it's one of the few haggled over items in the states.